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Planes, trains and snowmobiles put family-controlled Bombardier on track for success

With company results season in full swing, and stockmarkets very much in decline the world over, it is common to hear owners of  privately-held family businesses congratulating themselves on not being at the mercy of analysts and quarterly reporting, writes Marc Smith. However, there are a number of family-controlled public companies who are bucking the trend and combining the best aspects of private and listed status.

One such company is Canada-based transportation giant Bombardier, the world's leading supplier of metro trains and makers of Learjet and Challenger planes. Forty years after taking the business public, the founding family last week celebrated reaching a net yearly income of $1 billion for the first time in its history.

"During the past year, we more than held our own as the world's financial markets tumbled and the global economy weakened," said Pierre Beaudoin, third-generation president and CEO.
 
"There is no doubt that we are going through challenging times and our business environment is changing fast. There's a need for prudent execution, clear priorities and decisive action in the current context. However, we believe we are well positioned to face this difficult economic environment with a strong balance sheet, high level of liquidity as well as a large and diversified backlog, both by product and geographies," he added.

Bombardier's mission is simple: to be the world's leading manufacturer of planes and trains. Such a clear and concise objective is as refreshing as the new industry upon which founder Joseph-Armand Bombardier built the company -  snowmobiling.

But while Joseph-Armand wanted to help people travel across the snow-covered roads of rural Québec, which culminated in the launch of the world-famous Ski-Doo, his grandson is focused on navigating the rough financial terrain to ensure the company prospers as it heads towards smoother ground.

Having joined the company in 1985, Pierre took the reins in June last year after being named as the future president in November 2007. He took over from his father Laurent, son-in-law of Joseph-Armand, who is credited with growing the business and taking it public in 1969. Laurent said the announcement regarding the succession plans had been made so far in advance "to allow for an orderly transition", proving it is more than possible to achieve a family succession process within the listed setting.

While some may sniff at a family having an unbroken train of leadership at the head of a public company, the results speak for themselves. In 2008, revenues increased by 13% to reach $19.7 billion, earnings before income and taxes  reached $1.4 billion (up 56%), while earnings per share topped $0.56, compared to $0.16 a year previously. The company's cash position also remained strong at $3.5 billion compared to $3.6 billion in 2007.

On the same day that the company released its results, it also announced that it had won a $249 million contract to supply trains to UK transport organisation National Express.

While Pierre leads the company, his father remains as chairman, and family members JR André Bombardier (vice chairman) and Janine Bombardier (president and governor of the J Armand Bombardier Foundation) completing a healthy family representation at board level.

The family's presence and leadership has meant that the major criticism of listed companies – that they have a detrimental focus on short-term returns – has been avoided. Equally some of the best aspects of a privately-owned family business – knowledge passed from generation to generation and the trust garnered between family members and customers over time – are preserved.

It may be sacrilege to some, but Bombardier has shown that combining a listed status with family management can work just as successfully as a privately-owned enterprise.

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Bombardier turns to third-generation leader

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